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Can Shahid Khaqan Abbasi’s amnesty scheme help bring assets back to Pakistan?

Prime Minister Pakistan Shahid Khaqan Abbasi has announced a major one-time tax amnesty scheme to spread the tax net and bring back the undeclared local and offshore assets after nominal tax payment of 2% for those declaring or returning foreign cash earnings or endowments; 3% for those holding assets or property offshore; 5% for people maintaining banks accounts in dollar denomination abroad.

“We are introducing a tax amnesty scheme through which people with undeclared income earned before June 30, 2017, on assets within the country will be able to bring them in the tax net by simply paying a five per cent penalty,” the Prime Minister said.

PM Abbasi's five-point tax reforms package

  1. CNIC numbers to be made NTN numbers to monitor tax compliance of all citizens.
  2. Income tax brackets and percentages to be revised. Complete tax exemption on annual income up to Rs1.2m; maximum percentage of 15pc to be levied on income above Rs4.8m per annum.
  3. Undeclared assets held locally or abroad to be declared after payment of nominal penalties. Those who avail scheme to be granted a one-time exemption from accountability laws.
  4. Tax to be collected on all property transactions to be made uniform. Govt to have the right to purchase any property by paying 100pc over and above its declared value within six months of its registration.
  5. Government to monitor citizens' financial records and issue notices if they find evidence of tax evasion. Penalties to be decided in parliament.

Political parties in opposition, Pakistan Tehreek e Insaf (PTI) and Pakistan Peoples’ Party (PPP) has rejected the PM’s tax amnesty scheme accusing of giving a protection to black money holders and burden on the genuine taxpayer. PTI chief Imran Khan has decided to go to court against recent amnesty scheme and PPP’s Rabbani has also shown concerns over amnesty scheme ahead of the election this year.

Dollar account holders in Pakistan who have purchased dollars with undeclared funds can also regularise them on 2 percent payment. Further, all remittances less than USD 100,000 per year per person will continue without any questions from any agency about the source of funds and enjoy tax exemption but remittances greater than that amount will enjoy tax exemption but may be scrutinised by the Federal Board of Revenue. Furthermore, any new foreign exchange accounts can only be opened by tax filers.

Pakistan’s stocks rose to the peak in eight months after Prime Minister Shahid Khaqan Abbasi announced an amnesty scheme and income tax cuts aimed at battling rampant evading in an attempt to hold up the country’s deteriorating finances.

Nazish Islam - a media graduate with an undying love for chai, books, traveling, series shows, sports, hijab, and of course writing.

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Can Shahid Khaqan Abbasi’s amnesty scheme help bring assets back to Pakistan?

Prime Minister Pakistan Shahid Khaqan Abbasi has announced a major one-time tax amnesty scheme to spread the tax net and bring back the undeclared local and offshore assets after nominal tax payment o...